The Auditing Practices Board has proposed accountants be forced tompany directors. drop clients who obstruct them from carrying out full and proper audits.
The radical proposal was made in a draft accounting standard issued this week, SAS 610, ‘Imposed Limit of Audit Scope’. Out to consultation until 22 January, the standard is designed to toughen up rules which apply when auditors find the scope of their work has been limited by directors.
Ian Plaistowe, APB chairman, said: ‘The objective of any audit is for the auditors to express an independent opinion on the financial statements.
To achieve this, they must be able to carry out whatever procedures they consider necessary. The exact nature of the work they need to do is a matter for the auditors alone to decide; the directors may not override the auditors’ professional judgment by imposing restrictions on the scope of the audit work.’
He added: ‘For auditors to accept appointment on the understanding that certain audit work will not be performed – and that they are only expected to issue a report containing a disclaimer of opinion – threatens public confidence and is a matter of serious concern to the APB. These are audits in name only. The new standards put the auditor’s position beyond doubt.’
The APB will also open up debate later this month on the dilemma facing auditors in responding to demands from the public, government and regulators that they increase their share in tackling fraud.
A consultation paper on auditing and fraud is due to be published at the end of the month which the APB is understood to have discussed with industry minister Ian McCartney and the Financial Services Authority.
The paper is expected to propose various changes to the audit process and the structure of corporate governance.
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